Investing in stock market

POSTED BY Srinidhi R ON August 5, 2011 11:11 am COMMENTS (3)

Hi,

As the stock market has taken a beating for a week now, I am planning to invest in some of the  following stocks:

Canara bank, Sesa goa, RIL, ONGC, JSW Steel Limited

I’ve shortlisted these based on the data on moneysights: They are near 52wk low, lower PE, cash rich and good upside potential.

I am planning to invest for the long term (atleast 3 yrs)

Can you suggest if I am on the right path and doing anything fundamentally wrong?

Thanks,

Srinidhi

3 replies on this article “Investing in stock market”

  1. Ramesh says:
    August 16, 2011 at 12:37 pm

    In my opinion, do your own research.
    If you are ok with taking the risk, and you understand that it is partly speculative (atleast!), then yes, go ahead with investing directly.
    Do remember, mistakes help more, if you are ready to learn from them.
    Also, since it is a small part of your portfolio, a wipeout (in the most extreme case) wont destroy the total value of your portfolio.

    Keep learning. Keep investing.
    Ramesh

    Reply
  2. Ramesh says:
    August 5, 2011 at 12:02 pm

    Fundamental analysis is much more than that. You have screened some of the stocks, and putting money on the basis of that is “speculative”. If you are aware of that, then it is fine, but if you are thinking that this is what investing is, then you are completely wrong.

    This is not to discourage you, but you should be able to tell what is the intrinsic value (approx.) of each of the companies, and what kind of approx. future growth potential do these companies have? How is their management, in working out the sector specific nad company-specific things? What things can go wrong?

    Then, what will you do if the stock prices come further down. Since, they are at 52-week lows, they can go lower also. How are you going to work things out then? Are you going to keep the money in them OR you are going to buy more (after all, more down is more 52-week lows, even lower PE plus other of your criteria) OR you are going for a STOP-LOSS (in my opinion, this one is totally bad) OR what?

    Then again, what are you going to do after 3 years? etc.

    Reply
    1. Srinidhi R says:
      August 16, 2011 at 12:05 pm

      Hi Ramesh,

      Thanks a lot for your inputs.

      I understand that I am being speculative on some aspects. The background study that I’ve done for selecting stocks is to reduce the risk to certain extent and not a detailed analysis as I am yet incapable of that. So should this lack of knowledge discourage one from participating in direct equities? Or can one go ahead and invest a small %age of his portfolio into direct equities and keep learning subsequently?

      I understand that I’ll be bearing risks nevertheless and that I’ve to constantly improve my knowledge. So when the investment horizon is long, won’t that reduce some more risks associated with direct equities?

      Thanks,
      Srinidhi

      Reply

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